Abstract:

This case study is about Bharti

Airtel Ltd. (BAL), the market
leader in the Indian
telecommunication industry and
its globalization strategy. BAL's
telecom model was considered as
the new model for telecom and
effective for emerging markets
like India, according to experts.
BAL had established itself as a
dominant player in India with its
innovative business processes
and strong brand, but was
witnessing tapering growth
because of increasing
competition and saturation of the
more lucrative urban markets.
While more and more players
were eyeing the fast-growing
Indian mobile market which was
experiencing high growth, BAL
put its sight on foreign shores.

The acquisition of Zain Group's telecom business in fifteen

African counties in 2010 gave it a footprint in the African
continent. While concerns regarding whether BAL had overpaid
for the deal remained, industry observers were keenly observing
to see whether the company could replicate its successful
telecom model in these developing and emerging markets.
Africa posed an intriguing environment with different cultures,
political forces and socio-economic environment. After
completing the deal, BAL was in the process of giving shape to
its strategy for the African markets.
Issues:

» Understand the issues and challenges in globalization,

especially the critical success factors in emerging markets.

» Understand the importance of business process innovation and

strategic partnerships.

» Appreciate the role of tailoring strategy to fit a specific

industry and business environment .

» Analyze BAL's strengths, weaknesses and its external

opportunities and threats.

» Understand and discuss cross-country differences in Cultural,

demographic and market conditions and its possible impact on
business.

» Probe the role, importance and pros and cons of legal and
regulatory framework.

» Explore the ways a business can be successful in international

markets.
"We are not going with a static mind that ‘okay, we need to
copy India.'… (The) objective is to build a strategy that is
appropriate for each country of Africa."1
- Manoj Kolhi, CEO (International), Bharti Airtel Ltd., in
June 2010

Foray into Africa

In June 2010, leading Indian
mobile telecom company Bharti
Airtel Ltd. (BAL) concluded a
deal with Zain Group 2(Zain) to
buy its businesses in fifteen
African countries. Zain, Africa's
second largest mobile telecom
service provider, had operations
in seventeen African countries,
apart from six Middle Eastern
countries3. The deal, valued at
US$10.7 billion, was considered
one of the biggest acquisitions in
the emerging markets. With this,
BAL's subscriber base rose by 42
million to reach 185 million,
which made it the world's fifth
largest mobile telecom operator4.

BAL, which had earned a name

for itself globally with its low
cost model and strategic
innovations, was actively looking
to globalize itself since 2007.
In the years 2008 and 2009, it was in advanced stages of
negotiation to complete a deal with the MTN Group (MTN),
Africa's largest telecom company, but the deal fell through both
times. MTN had a presence in more than twenty African
countries.5
Many analysts felt that BAL had
settled for the second best, and
called the deal a ‘forced
marriage'. They said that the deal
with Zain was nowhere as
attractive as the one
contemplated with MTN,
especially at a price tag of
US$10.7 billion. The reasons for
this, they said, were declining
profits and the low contributions
of the fifteen acquired businesses
to the group's revenues. Zain's
African assets accounted for
about 58% of its total subscriber
base (71.8 million), but they
made up only a fraction of its net
profits6. Though BAL was able to
acquire a global footprint and a
much larger customer base
through this deal, industry
experts believed it would be
difficult for it to leverage on the
business model and strategies
which had kept it afloat and
ahead of the competition in India.
Africa represented diverse cultures with many of the countries
having minimal infrastructural resources. Further, BAL had to
function in fifteen different countries, each of which came with
its own different regulatory requirements and geopolitical risks.
Jaydeep Ghosh, Executive Director of KPMG 7, said, "Bharti
has replicated the low-cost model through outsourcing in India,
but depending upon different geographies (in Africa), it will not
be easy."8
COMPANY OVERVIEW

From its humble beginnings in

1976 as a bicycle part
manufacturing business, the
Bharti Group had transformed
itself into a successful business
conglomerate with businesses
such as telecom, retail, financial
services, and food....
EMERGING AS THE
MARKET LEADER

By the end of 2001, BAL had 1

million subscribers but was at
strategic inflection point. Though
the market reflected huge
potential with the number of
subscribers almost doubling each
year...
COMPETITION

The competition in the Indian telecom market was increasing by

the year. In 2007, Vodafone entered India by acquiring Hutch,
while players such as Reliance that operated through the CDMA
technology, were allowed to offer mobile telecom services using
both GSM and CDMA Technology....
GLOBALIZATION INITIATIVES

BAL felt that its extensive experience in India, coupled with its
unique business model, would help it tap the opportunity
provided by other developing and emerging markets and create
value for its customers...
ACQUISITION OF ZAIN

On February 15, 2010, BAL

decided to enter into an
'exclusive discussion' with Zain,
Africa's second largest telecom
company, which operated in....
CHALLENGES IN AFRICA

The African sub-continent posed

numerous challenges to BAL.
There were significant cultural,
language, and regulatory
differences among the fifteen
countries...
EMBARKING ON THE
AFRICAN SAFARI

Soon after the deal, Mittal delegated responsibilities to senior

managers in top positions in BAL in India and also got new
people on board.The entire international operations were being
headed by Kohli, who was promoted as CEO (International) in
January 2010...